BlockBeats News, March 14th, Strategy founder Michael Saylor posted stating a simple theory of digital credit:
Acquire a large amount of appreciating capital (BTC).
Use this capital as collateral to secure credit backed by equity (STRC).
Monetize a portion of the appreciating asset — directly or through derivatives (MSTR) — to fund dividends.
Credit investors exchange volatility, risk, duration, and performance with equity investors. Credit (STRC) gains cash flow and stability. Stock (MSTR) then sees amplified value performance and volatility.
BlockBeats Note: Strategy, as the largest crypto treasury, holds 738,731 BTC, with a total cost of approximately $56.04 billion. MSTR is Strategy’s publicly traded equity, currently with a total market value of $46.6 billion. STRC is a floating-rate perpetual preferred stock issued by Strategy, positioned as a short-term high-yield credit product, with a price anchored around $100, currently offering an annual dividend yield of approximately 11%, distributed monthly in cash, with the dividend yield adjusted monthly.
Strategy raises funds through continuous new issuances of STRC to buy BTC, utilizing the generally acknowledged notion that the total BTC holdings’ value should be lower than the MSTR market value to inflate the listed market value and continue issuing STRC in the hope of spiraling to new heights with a left-footed right-footed approach. The leverage internalization magnifies the greater volatility of MSTR’s stock price relative to BTC, serving as a leveraged approach to Bitcoin investment.
